Government-Initiated Corporate Social Responsibility and R&D Expenditure Stickiness: Evidence From the Targeted Poverty Alleviation Campaign

In this paper, we examine how firms' participation in government-initiated corporate social responsibility (CSR) activity affects their research and development (R&D) cost behaviour. Exploiting the targeted poverty alleviation (TPA) campaign in China, we find that government-initiated CSR participation enhances R&D expenditure stickiness through the funding effect and technology-supporting effect. These findings are robust across various tests. Further analysis shows a stronger impact among non-politically connected firms and companies with lower political uncertainty. This paper sheds new light on the outcome of corporate participation in government-initiated CSR and furnishes novel insights into the effect of CSR on firm innovation.